Question

How does diversification benefit investors in mutual funds?

a.

It increases the risk of investments

b.

It reduces the financial risks of investments

c.

It guarantees a fixed return

d.

It limits the convenience of administration

Answer: (b).It reduces the financial risks of investments Explanation:Diversification, a feature of mutual funds, reduces the financial risks of investments.

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Q. How does diversification benefit investors in mutual funds?

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